The deal gives Europe's second-largest energy giant, BP Plc, 30% participating interest in hydro-carbon blocks allotted to Reliance Industries, led by Mukesh Ambani.

Though the deal was for 23 blocks, the government of India has cleared the stake sale in 21 blocks, approval for the other two blocks has been held because of technical reasons.

Jaipal Reddy, petroleum minister said: “The CCEA has approved the stake sale deal. All conditions of production sharing contract will be imposed and formal approval will be given after BP (the parent firm) gives the necessary financial guarantees."

BP's investment will be to the tune of $20 billion, making it the biggest foreign direct investment in the country. This includes the contingent payment of $1.8 billion, linked to the new discovery of commercially viable hydrocarbon resources and a $11 billion additional investment as part of the joint venture (JV) between the two, BP and RIL, to source and market gas in India. The JV also plans to create infrastructure that will enable it to receive, transport and market the gas in the Indian market.

Bob Dudley, BP Group chief executive, stated in a public statement: "This transaction is part of BP"s strategy of creating long-term value through alliances with strong national partners, taking material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets. We will now work to complete the commercial agreements for the deal in the next few weeks."

The BP-RIL deal is approximately 70% bigger than Posco's investment in an integrated steel project in Orissa which is now the second biggest FDI proposal in India.

It, RIL-BP, deal is more than three times the size of the Cairn India-Vedanta deal. The deal, Cairn India-Vedanta, that was finalized last year in August and received formal approval from CCEA in July was valued at $6.02 billion. Under the deal Cairn Energy, of the UK will sell 40% stake in Cairn India to Anil Agarwal's Vedanta Plc. The deal was initially set at $9 billion but as government set some riders for clearance it was adjusted to $6.02 billion.

Reddy also said that the final approval for the Cairn stake sale deal would come through “in the next few days". He said, the law ministry was vetting the terms of the agreement and a formal notice would go to the two companies.

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